Growing internationally successful tech businesses from Christchurch

@davelane you raise an interesting point there in terms of location. Given we're thinking what our strategy should be over the next 10 years, what markets should businesses be thinking of next?

Do we need to do anything to support market entry as well as the market readiness we have spoken of here?

Are there any business models that we need to be helping businesses with? Partnerships may offer an approach for some (either other NZ businesses or partners already in market), but I see alot of businesses going it alone.

@helenshorthouse I have little insight as to which markets we should be focusing on, but I think we should be focusing on learning how to identify them. There's no point in building world beating technology that a) no one wants, and/or b) no one knows about. We need to learn how to complement our ability to build things with our ability to work out what the market (where-ever it is) wants us to build. We've always fallen short on knowing who our users are/will be before we start building. The saying "build it and they will come" glosses over some very important details.

For one thing, every entrepreneur needs to realise that for every dollar they budget for building their product or service, they need to budget at least the same amount for marketing it (I say that as an engineer who's learned the hard way :)).

When talking about markets shouldn't it be about product/service fit and I agree with @davelane about the USA and its difficulties and @tobyburrows about Australia's attitude to NZ but clearly some products/services do fit, the trouble is "me too" products don't. As @davelane suggests Asia should be a significant focus and that aligns with Govt strategy as well as just basic logic when you look how our country and our communities are evolving.

In my area of energy services I see that Asia is running about 15 yrs behind what we are doing in NZ and so those markets are looking for the innovation already present here.

Market entry is really important, as a small company I can't afford the resources to set up "in market" do the research and then launch a service. But what I want to do is find a partner in market who is involved in the sector I'm interested in and can benefit by adding their expertise/clients/widget to my technology solution.

So to answer @helenshorthouse I think active partner hunting assistance would be a real benefit. I know this is already done by NZTE but I would suggest that we are talking about moving that down a few layers into the smaller companies (the 75%) not just the bigger more visible 10%

Small hi-tech companies are generally fiercely independent. Their needs are often unique, so a one-size-fits-all strategy is unlikely to work.

We can have many discussions about what everyone thinks is needed to grow the hi-tech sector but this needs to be ground-truthed to come up with validated (!!) solutions.
To often, 'support' for high tech companies is rigidly structured to suit funding agencies - which can work well (I've successfully processed over 50 Technz proposals where this was a relevant form of support). However in many instances companies need support in completely different ways.

So I recommend establishing a system which starts by asking each company what they need (this asking may need to be fairly assertive - almost an audit) and then customising support on a case by case basis for each company.

Can government and other agencies be this flexible rather than just offering pre-defined packages of 'support'? If so then there could be hope....

Perhaps a better question is "What IS a successful Canterbury tech business?"

There's lots of evidence that we have lots of good ideas (everyone says so), and clearly we have lots of people doing things (100s of companies) with the help of legions of supporters (advisers, facilitators, communicators, mentors, and even the odd old-fashioned consultant).

However our results (per the briefing paper) aren't that great. And we have some serious doubts about whether paying customers think our ideas are as good as we do. Why is that?

Some of these things are also contributors to what seems to me to be a distinct key challenge for our region (and country): fragmentation.

Because of our size, we're exceptionally vulnerable to fragmentation. Our relatively limited resources are spread too thin, with too much competition for skill, money and attention. We're doing too many things poorly, rather than fewer things well.

Now that's a challenging thing to change, since it's largely a product of the legitimate choices made by enterprises and individuals (which often amounts to the same thing). Over the years a lot of public resource has been poured into clusters, networks, programmes, etc. But in the end, improving this relies on individual enterprises getting together and working together.

PS: I'm not so sure either that lack of promotion is the problem. It seems we are now drowning in a world of promotion and that the chronic difficulty is to make yourself heard.

I started before by asking "What is a successful Canterbury tech business"

I changed the question for several reasons:

1. Because it's important to define the sector sensibly, so that you can measure it, and thus see if you're making progress. The briefing paper does a cursory job of this, using the usual standardised statistical breakdowns, but often these don't capture what you want to measure that accurately. With the sort of capability CDC has it should be possible drill down and recombine to arrive at a more useful picture of the sector. Sanity checking that against the FLUX catalogue would be useful too.

2. Because it's considering what it is that makes something a "Canterbury tech business" is useful for thinking about what we might need to consider. Few businesses are owned and operate just locally. What are the issues around foreign-owned businesses that choose to operate here; locally-operated businesses bringing in foreign investment; locally-attached investors repatriating wealth and skills; local businesses increasingly forced to locate more of their operations (including development) elsewhere?

3. Do tech businesses have to operate internationally to be successful? Is Australia really international? What's wrong with "me too" businesses?

@iandouthwaite, good points and just to clarify there is nothing wrong with "me too" businesses but they are more susceptible to the local environments that @davelane was describing... I wasn't very clear.

Certainly NZ has less capital to invest in early stage tech companies but we are also pretty good at building companies with less capital. The "number 8 wire" approach is not just for farmers but tech companies too.

The focus on "lean startups" is changing the idea that investors should throw massive amounts of money at companies that are yet to prove the basic assumptions of their business model.

There are a number of promising local activities that can help the early stage capital problem including;
- Canterbury Angels - a local angel group which formed recently
- Lightning Lab - a tech accelerator that pays companies to attend and prepares them for seed investment. Applications are open now for the first Christchurch programme.
- International Angel/Seed investors investing into New Zealand companies. We are seeing a number of exciting steps including the visit that Peter mentioned above of 2 very high profile individuals.
- Equity Crowd Funding (ie PledgeMe, Snowball Effect etc). NZ is actually ahead of the US in this area.

We have a long way to go but I'm optimistic about Canterbury's tech future and improving access to capital for early stage ventures.

@terrypaddy @davelane I have to agree with the sentiment of the move and focus on Asia. Indonesia alone has almost the same population as the USA and here we haven't even started on the big ones like India and China. Philippines, Vietnam and Thailand and there you have another USA. The markets are not as mature but they are growing and spending and have major gaps in the market that are prime for NZ companies to slip into. A strong focus on JV partnerships in Asia are vital and understanding the cultural nuances but that can all be learned/taught.

A good example here is the adoption of GST in Malaysia and Indonesia recently. We have had GST since 1987, have some really good SMB cloud software solutions such as XERO etc but no one seems to be pursuing these markets proactively, where is Xero in these shifts themselves?. I remember when GST was implemented in NZ and how much it drove computerization of small business to help with the accounting problems of GST. Surely you follow government policies and go to where the major shifts are happening. Especially if we are experienced in them. We have plenty of opportunity on our door step without having to fly to LAX.

@gaberijpma again, speaking as a kiwi of US origin, the fixation on breaking into the US market is, in my opinion, folly. There's a reason why it's almost impossible to find professional indemnity insurance to trade in the US. You cite a number of excellent examples of why we should be focusing on those other countries - it's worth our while to learn about other cultures. And anything that allows us to bypass LAX has a lot to recommend it.